Question

Zoo Inc. is preparing its cash budget for March. The budgeted beginning cash balance is $21,000. Budgeted cash receipts total $117,000 and budgeted cash disbursements total $86,000. The desired ending cash balance is $65,000. The company can borrow up to $100,000 at any time from a local bank, with interest not due until the following month.

Required:
Prepare the company's cash budget for November in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance.

Answer 1

Answer: Please see answer below in the explanation column

Explanation: Zoo Inc company's cash budget for November indicsating borrowing is given by

Cash balance, beginning $ 21,000

Add cash receipts 117,000

Total cash available--(Cash balance + cash receipts)= $138 ,000

Less cash disbursements $ 86,000

Excess (deficiency) of cash available over disbursements (The beginning balance plus the expected cash receipts less the expected cash disbursement) ($ 21,000+$117,000)--$86,000 = $52,000

Financing ($65,000 − $52,000)= $13,000

Borrowings ----$100,000

Cash balance, ending ----$100,000+ $52,000 = $152,000(Burrowings + Excess cash available over disbursements)